What is Revise Stop Loss/Trailing Stop Loss?

You place your stop loss when you are opening a trade. On some occasions, you will be stopped out pretty fast. Other times trade will go as you wanted to. That is good, but what do you do when your trade is profitable? It still can turn around and trigger your stop loss and from profitable trade, you will end with a loss.

Now when a trade is profitable, simply raising the stop loss to the entry point. This way even if the price is going to turn against a position, do not lose a single dollar.

When to raise stop to entry point?

Not as soon as your trade is profitable. Just wait some time and see how things are. You have to work out your own system. Usually, wait until the price is at least twice as far from entry point as your stop-loss is. So in a trade where entry position was at 20 and stop-loss set at 18 (2$ lower from entry price), raise stop loss to 20 as soon as price will go up to 24$ (twice as stop-loss so 2×2$=4$). Sometimes raise it earlier – it really depends on the situation.

When the price is still going up, keep raising stop even further. Why?

To protect the profit. If the price will fail to reach the target, still book some profit from that trade. It is called a trailing stop because your stop loss is practically following the price all the time. When the price goes up, so is your stop loss. Of course, if the price in an uptrend is down, you are not lowering your stop. There are many methods of using a trailing stop loss.

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